revenue management definitions

8/7/2019 Revenue Management Definitions

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Revenue Management Definitions

Actual • Actual revenue results (occupancy and average rateincluded)

Ask For Rate • You sell this rate only after the caller asks for it

Average Rate • Room Revenue ÷ Rooms Sold

Average Length of Stay • Calculated average for all hotel guest stays

Base • Fixed rate and contracted business such as government,preferred corporate, consortia etc. This is generally lowerrated business a hotel would accept to help reach the goalof 100% occupancy.

Blocking • Reserving a particular room type or room number for aguest

Close-Outs • You can completely close your hotel to acceptingreservations for any date (s)

Closed to Arrivals • (CTA) A restrictor that stops guests from arriving at yourhotel on a specified date

Confidential Rate • You don’t tell the guest their rate. This usually involvestour rates or special package rates

Definite • Group room contract that has been signed or rooms areguaranteed for arrival or until cut-off date

Demand • The desire for a commodity together with the ability topay for it

Denial • Rejected business

Duration Controls • Restrictors such as: time constraints; no one night arrival;or minimum length of stay

Elasticity • a measure of sensitivity of demand for goods or servicesto changes in price or other marketing variables such asadvertising

Fenced Rates • Fenced rates are a reservations department sales toolwhich provides a series of options to the guest. Guests arenot forced to accept these restrictions but their rate is

determined by which (if any) fences they accept.Examples of fenced rate options include nonrefundableand non-cancelable reservations, advanced purchasereservations, and staying over a weekend.

Forecast • Expected revenue results based on analysis, (occupancy and average rate included)



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Guarantees • You may require advance deposits, credit card deposits orcredit card guarantees

GSI • Guest Satisfaction Index

Incremental Revenue • Revenue above and beyond what was originally budgeted

Inventory • You can control what type of rooms and how many roomsyou make available to a particular market segment.Caution: Travellers are smart and many will call both yourhotel and the CRS. If the traveller discovers that she canget the room she wants from your hotel but not the CRS,it damages your credibility

IT Reservations • Individual traveller

Lead Time To Book • The time difference between the reservation booking dateand the date of arrival

Market Segment • Group of guests with similar traits and purchasing habits.For example, corporate, seniors, government, etc

Minimum Length of Stay • (MLOS) A restrictor that allows you to accept

reservations only from guests staying a minimum numberof nights specified by you.

No Show • Guests who have guaranteed reservations, do not canceland do not arrive at the hotel on the reserved date of arrival

Occupancy % • Rooms Sold ÷ Rooms Available

Overbooking • Practice in revenue management where more reservationsare taken than rooms available

Pace • The speed at which rooms in a market segment arereserved (pick-up)

Perishable Hotel Room • Can’t be put on the shelf and sold tomorrow

Pick-up • Typically refers to group blocks. The number of reservations that are made and deducted from the groupblock

Regrets • Reservation calls that do not result in a completed

reservation and are logged Revenue Management • The practice of maximizing profits from the sale of

perishable assets by controlling price and inventory andimproving service

RevManager • Management position responsible for maximizing hotelrevenue and profits



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Revpar • Revenue per available room • room revenue ÷ available rooms • occupancy % x average rate ÷ 100

R. O. I. • Return on Investment

Room Revenue • Rooms sold x average rate Sell Directed Rate • The rate you sell first to the caller

Sell Through • This restriction allows you to put an exception on datesyou have completely closed out. Any time you apply aClose-out to a date, a Sell Through (if you have set one)will automatically activate.

The Sell Through feature consists of 2 numbers. The firstis the number of rooms you want the CRS to sell throughthe closed-out date and the second is the minimumnumber of nights you will accept.

Example: If you set your Sell Through at 10/5, it meansthat the CRS will sell 10 rooms through your close- outdate for guests staying a minimum of 5 nights

Stay Pattern • The days (or pattern) that guests typically follow whenstaying at a particular hotel. Usually varies by market segment

Supply • The amount of a commodity available at a given price

Tentative • Reservations that are not guaranteed, but holding spaceuntil final decision is made

Walk-in • Guest who arrives at the hotel desiring a room and doesnot have a reservation

Wash • Difference between group block and what we expect they will actually pick up

Yield Management • The practice of maximizing profits from the sale of perishable assets by controlling price and inventory andimproving service

revenue management definitions

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